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September 17, 1984

The government reported that industrial production rose just 0.2 percent in August from the month before, while retail sales dropped 2.8 percent in the past two months, adding evidence that an economic slowdown is under way.

The increase in factory output was the smallest since November, the Federal Reserve reported Sept. 14, and followed strong 0.9 percent improvements in the previous two months.

Separately, the Commerce Department released retail sales figures that showed a 0.8 decline in August. The big surprise was the revised figure for July, which showed retail sales down 2 percent, instead of the 0.9 percent originally reported.

An economic report from a third agency, the Labor Department, showed wholesale prices slipped 0.1 percent in August, the first decline in 10 months. The decline reflected price-softening in food and fuel. Business price increases have been extremely moderate this year. In three months, April through June, the index remained steady.

The weaknesses revealed in the production, prices, and sales report could force forecasters to become more pessimistic about the economy in the second half.